On 8.7.2024, the author published an article on the VAT obligation to issue elec…
With the adoption of the Growth Opportunities Act (Wachstumschancengesetz) last Friday (22 March 2024), the German Federal Council (Bundesrat) paved the way for ‘genuine’ e-invoicing in the movement of goods and services within Germany. This is the beginning of preparations for e-invoicing in cross-border European transactions, as envisaged by the EU Commission's VAT in the Digital Age (ViDA) initiative.
The provisions apply exclusively to B2B sales within Germany, including sales by commercial legal entities governed by public law.
A ‘genuine’ e-invoice is an electronic invoice that complies with the requirements of Directive 2014/55/EU – and thus with the CEN 19631 standard (also known as X-invoice) – or that has an e-invoice format agreed on by the issuer and the recipient of the invoice and ensures the correct and complete extraction of the information required under Directive 2014/55/EU or that is interoperable with it.
The active consent of the invoice recipient to receive the e-invoice is no longer necessary. The e-invoicing obligation does not apply to invoices for small amounts (s33 of the German VAT Implementation Regulation (UStDV)) and invoices for travel tickets (s34 UStDV).
As of 1 January 2025, businesses will initially be obliged to just receive e-invoices. A general obligation to issue e-invoices will only apply as from 1 January 2027. Businesses in Germany with a total turnover of EUR 800,000 or less in the previous calendar year will still be exempt from the obligation to issue e-invoices in 2027. In addition, EDI invoices may continue to be issued in 2027 with the consent of the invoice recipient. Beyond that date, EDI invoices may only be used if they are compatible with the CEN standard and both parties have agreed to using them.
Paper invoices, invoices sent electronically and incompatible e-invoice formats will hopefully be a thing of the past soon. The change of processes admittedly costs time and money, and during the transition phase, two invoicing systems will have to be operated in parallel. In the long term, however, businesses will benefit from the e-invoicing obligation. By automating invoice processes, businesses can save time and resources as less manual intervention is required. E-invoicing significantly reduces the cost of printing, sending and managing paper invoices. Electronic transmission means that invoices can be processed more quickly, and payments can be accelerated, which improves companies' liquidity. Most invoice issuers will not be affected by the e-invoicing obligation before 2027. However, German businesses will have to entirely switch to receiving e-invoices as from 2025. The earlier the transition takes place, the longer the testing phase will be until even the last companies will have to swich to the new system at the beginning of 2028. Due to the provisions of the ViDA Directive, especially businesses operating across borders should have in place a well-established e-invoicing system because the central element of the cross-border invoicing system proposed by the EU Commission is an e-invoice structured in a standardised data set, which must be transmitted to the tax authorities within a few days of the service being provided as from 2028.
